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this is the kind of story i wish i could understand. there are reassurances in the article that this is more or less standard operating proocedure; but this is sufficiently over my head (or just written that way) as to let my fear and ignorance get the better of me. i dont have a mortgage, but ive been waiting for the credit crunch and have enough debt as to make such an event very painful.
these contracts deal heavily in CDS: A credit default swap (CDS) is a credit derivative between two counterparties, whereby one makes periodic payments to the other and receives the promise of a payoff if a third party defaults[1]. The former party receives credit protection and is said to be the “buyer” while the other party provides credit protection and is said to be the “seller”. The third party is known as the “reference entity”.
what happens when the insurers decide they wont insure the debt anymore?